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The theory behind setting up a reseller hosting business is fairly simple. You purchase capacity on a server and resell to your customers. What could be more straightforward? Well, the theory and the practice are very different because in order to succeed in the longer term you will need to offer a service above and beyond your competitors. We will now take a look at ways in which you can set up a winning reseller business and the challenges you may face along the way.
Before we look at the detail of setting up a reseller business which will create an income stream for many years to come, let us look at the mindset of those who wish to become a reseller. Prior to signing up for a reseller hosting package you will have many ideas, many thoughts and perhaps your mind has wandered to ways in which you can spend your new-found wealth? The first thing to do is create a business plan, this may change over time but it is a necessity, to keep your mind focused. Set yourself relatively simple goals along the way such as:
When you look at these five relatively simple stages they look more achievable than if you simply went from stage I, no business, to stage II, a reseller hosting business with continually growing repeat business. The human mind likes nothing better than to tick boxes and we feel a sense of achievement which gives you momentum and encouragement for the next challenge. If you lose the faith in just a matter of days or weeks then perhaps reseller hosting was not for you.
Like any other online business, the idea is to keep costs as low as possible while maximizing income. However, this can create a quandary for many new to the world of online business, finding a balance between quality and cost.
While there is nothing wrong in starting towards the smaller end of the market and working your way up. This is not the same as finding the cheapest reseller hosting package and then improving the quality and increasing your cost base as your business grows.
Quality over cost is a must for any business and especially reseller hosting businesses.
Remember, you could potentially have someone’s family income in your hands and if you’re hosting fails and you can’t deliver then you could decimate their lifestyle and finances. Focusing on quality service and quality reseller hosting packages may prove a little expensive in the early days. However, if you do your promotion and advertising correctly it will pay for itself fairly quickly. Remember, you won’t get a second chance to make a first impression!
As we touched on above, each of your customers will depend on you to host their websites and protect their long-term business reputation and income. The vast majority of e-commerce entrepreneurs will sign up to a web hosting package and then prefer to forget about the day-to-day challenges of hosting and simply get on with their business. As far as they’re concerned, once they sign on the dotted line and you take over the hosting of their websites, the responsibility for maintaining 24/7 presence on the Internet is yours. This ensures they have sufficient time to focus on driving their business forward while you look to expand your own.
Those who have been involved in arranging hosting accounts for websites will be well aware that support services are now an integral part of all packages. The vast majority of website hosting companies have a support service available 24 hour a day, seven days a week and 365 days of the year. While you will always be the face of hosting to your customers, while your hosting knowledge continues to grow, you may need advice and assistance from your hosting server provider. This also means that you have to be available 24 hours a day, seven days a week and 365 days of the year.
That ping on your phone could be a customer asking for assistance, requesting guidance or perhaps asking why their website is down and they were not informed. The more customers you sign up the greater the demands on your time and ultimately, if you are successful, you may require a team to ensure there is full-time assistance available. With the best will in the world you will experience issues from time to time. To a certain extent it is the way in which you tackle these issues rather than the issues themselves which will determine your success or failure.
The vast majority of web hosting companies will offer an array of additional software packages to their reseller customers. Many of these will include professional billing software which is automated and ensures that your customers are billed promptly and in a very professional manner. No ad hoc emails, no random requests but a structured focused approach to billing. This means that your customers will in time come to expect your invoices for example on the first of the month. They will likely have allocated their income for the coming month to ensure there are sufficient funds available.
It also goes without saying that whether using credit card details or direct debits everything should be automated. All the customer needs to do is read the invoice and ensure sufficient funds are available to cover the automated payment. Those who allow customers to pay on an ad hoc basis are playing with fire. Customers may have other things to do, they may be on holiday or they may be struggling to allocate funds to different areas of the business. Automation, automation, automation really is the only way forward.
When you sign up to a reseller hosting package you will be given specific capacity on a hosting server which you simply slice and dice and allocate to different customers. Each customer will purchase a maximum capacity which the vast majority will never fully utilize. However, those who oversell their host reselling capacity do so at their own risk.
As a rule of thumb, some experts suggest that you should leave 30% of your reseller hosting capacity free. This will ensure that hosting services are delivered at a relatively quick speed and also ensures that customers have the ability to upgrade and expand their capacity in due course. If you decide to go down this particular route you will need to factor in the additional costs of the 30% of redundant capacity when calculating the cost of your customer hosting packages. Reseller hosting businesses which are always operating at maximum capacity leave their customers open to slower processing times. They may also find it relatively expensive to move to a new server once they have outgrown their initial capacity.
When setting up any business there is often a temptation to build products and services around your thoughts rather than customer requirements. Reseller hosting is no different, there is a temptation to tailor your hosting packages to what you think the customer needs rather than what they actually need. So, in order to ensure that you offer the best service, the best package and the best value for money you need to research your market and your target customers. What is the competition offering? How can you make your packages stand out? Are there particular issues you can address?
If you can take away the stresses and strains of worrying about hosting and allow e-commerce entrepreneurs to focus wholly on their business, utilizing their own strengths, you have a good chance of being successful. If they are constantly asking you for advice, additional capacity and perhaps new software packages, then maybe you don’t know your customers as well as you should? In simple terms, give your customers what they need to keep them coming back, rather than what you think they need – there is a difference.
Over the years we have seen some major security breaches with online businesses many of which could have been easily avoided. We have seen phishing scams, traffic redirects and an array of other professional and often innovative data grabs. SSL certificates ensure that websites are certified via a Certificate Authority using identity passwords thereby creating a growing trust between website owners and online customers. This simple yet effective method of security is now being encouraged by major search engines and will eventually become mandatory. If you have yet to upgrade your website to https then not only do you risk losing traffic and business in the future but you could see your rankings plummet on the likes of Google.
Security should be one of your main priorities when setting up a reseller hosting business. You are not just protecting your business but also those of your customers. A simple flaw, an expired SSL certificate or any other lapse in security could prompt an array of unwelcome security flags from search engines and browsers. The vast majority of online surfers will run for the hills if they see any kind of security issue. So, keep up with the latest security advice, change your passwords on a regular basis and monitor irregular activity on your server so you can address any issues very quickly.
The idea of setting up a reseller hosting business is fairly straightforward, buy capacity and sell capacity. Once you have a package in place, everything is secure and you have put together offers which will appeal to your target market, it is then time to start promoting your ecommerce business. While the idea of flicking a switch for a long-term lucrative income stream may seem attractive, this is not how it works. You will likely run at a loss in the early days, building up your business, tweaking your offerings and making yourself competitive. However, as you sign up more and more customers and repeat billing income continues to grow you will build momentum and set yourself on the road to success.